The Delhi Income Tax Appellate Tribunal ( ITAT ) has upheld the deduction claimed under Section 54F of the Income Tax Act, 1961, and dismissed the appeal filed by the department.
The issue in this case is regarding the claim of deduction for long-term capital gains arising from the sale of a property, which the assessee had reinvested in the purchase of a new residential property.
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The assessee had acquired a plot of land in Noida in 2006 and sold it during the assessment year 2014-15, earning a long-term capital gain of Rs. 3,43,44,059. He claimed a deduction under Section 54F of the Income Tax Act by investing Rs. 3,53,50,000 in the purchase of a new residential property from M/s Om Sai Infravision Pvt. Ltd. and M/s Om Sai Infrapromoters Pvt. Ltd.
The Assessing Officer ( AO ) disallowed the deduction by observing that the assessee had failed to furnish possession certificates and electricity bills to prove that he had taken possession of the new property within the statutory time limit.
The assessee, who was aggrieved by the AO’s decision, appealed before the Commissioner of Income Tax (Appeals) [CIT(A)] and the latter ruled in favour of the assessee and deleted the addition made by the AO.
The CIT(A) noted that the assessee had complied with all statutory requirements, including making timely payments to the builder and deducting TDS. The delay in possession was attributed to the builder’s failure to complete the construction on time, which was beyond assessee’s control.
The ITAT upheld CIT(A)’s decision and observed that the assessee had fulfilled all necessary conditions for claiming the deduction.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The bench noted that the assessee had invested the capital gains within the stipulated time and that the delay in possession was due to the builder’s failure to complete the project on time, which was not the assessee’s fault.
The ITAT dismissed the revenue’s appeal, stating that he had complied with all statutory requirements and that the delay in possession was not attributable to him.
The ITAT, comprising M. Balaganesh (accountant member) and Madhumita Roy ( judicial member ), ruled in favour of the assessee.
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